Rachel Reeves told the nation that her economic plan is “the right one for Britain” as she delivered her Spring Statement.
Ahead of the speech to MPs on Tuesday, she stressed: “Today will set out how we are cutting the cost of living, cutting borrowing and growing the economy.”
But the Chancellor has been accused of undermining the UK economy with her series of tax rises.
Ms Reeves got a triple boost recently with upbeat figures on retail, exports and the public finances.
But unemployment is rising sharply, hitting 7.6% in the capital, including a nine-year high for young Londoners.
Here are the key points from her Spring Statement:
Economic growth
The Office for Budget Responsibility (OBR) updated its growth forecasts, taking into account lower net migration. It cut its forecast for 2026 to 1.1%, from its prediction of 1.4% at the autumn Budget, but then upgraded its forecasts to 1.6% in both 2027 and 2028, and 1.5% in both 2029 and 2030.
Inflation
The inflation rate was 3 per cent in January, down from 3.4 per cent in December, with food price inflation down to 3.6% at the start of the year. The OBR predicted inflation falling from 3.4 per cent in 2025 to 2.3 per cent in 2026 and 2.0 per cent from 2027 onwards.
Cost of living
After accounting for inflation, people are forecast to be over £1,000 a year better off , Ms Reeves claimed
Energy
The Chancellor stressed that energy bills would be coming down by £150 from next month.
Tax
While wages are rising for millions of workers, their pay rises are being eaten away by inflation and tax rises including the ‘stealth’ levy hitting millions of people as the thresholds for paying income tax are frozen up until April 2031 .
Borrowing
Borrowing is set to be £18 billion lower, according to the OBR, compared to the autumn forecast. Public Sector Net Borrowing is set to fall from 4.3% this year, to 3.6% next year, then 2.9%, 2.5%, and 1.8% in 2029-30.
Unemployment
With unemployment already at 5.2%, Ms Reeves said it would peak later this year and then fall in every year of the forecast period, ending the Parliament at 4.1%. The OBR expects the unemployment rate to rise from 4¾ per cent in 2025 to a peak of 5.33 per cent in 2026.
Migration
The UK’s adult population is forecast to grow from 56.7 million this year to 58.1 million by 2030. Growth is around 50,000 a year lower than in the OBR’s November forecast, entirely driven by lower net inward migration.
Interest rate cuts:
The Chancellor emphasised that there had been six cuts in interest rates since the election. Those interest rate cuts will save households over £1,300 a year on a typical new fixed-rate mortgage, she added.
Debt:
The Government expects to spend £3bn a year less on debt interest by the end of the Parliament than was forecast in the autumn. A huge drag on the public finances is servicing Britain’s £2.9 trillion debt mountain.
Headroom
Ms Reeves told MPs that her fiscal cushion, or “headroom” had increased from £21.7bn to £23.6bn.
